The Internet Radio Fairness Coalition, which has been assembled
by several Internet and broadcast radio services including Pandora, Clear
Channel and many others, officially launched last week. The Coalition comes
together with a mission of urging Congress to support legislation of the
Internet Radio Fairness Act of 2012 (IRFA), which they believe will bring the
royalty system for Internet radio into the 21st century.

The Coalition believes that the IRFA will create a sustainable
business model for the music industry, giving consumers “more choices and more
products for listening to the music they live; enable artists to earn more
money as Internet radio grows; create a marketplace that will attract
entrepreneurs to invest in new, innovative ways to deliver music to the public;
and drive higher revenues for record labels.”

"Our piecemeal legislation covering music royalty rates was
enacted decades before we had the Internet or current technology,” said Ed
Black, President & CEO, Computer & Communications Industry Association
(CCIA).

The legislation (introduced on Sept. 21) calls for all digital
music services to be judged by the same rate-setting standard, which the
Coalition feels will put Internet radio under a standard that is balanced for “the
promotion and creation of creative works” and one that “encourages the growth
of robust and sustainable markets for these works.”

The current royalty system, overseen by the Copyright Royalty
Board (CRB), splits digital music into two categories of Internet radio
and satellite radio that each carry its own royalty rate-setting standard.

“We believe that market-based solutions are the way to go,"
said Bob Pittman, CEO of Clear Channel. "But in the absence of these
agreements, the CRB needs to have and consider more relevant information so
they are better able to develop a rate structure that will lead to a healthy,
sustainable Internet radio marketplace. This will enable artists to earn more
and connect more with their fans, consumers to have more choices, and entrepreneurs
to invent and invest in new services."

The Coalition believes that the standard for Internet radio is
inappropriate and limited in the data that can be considered, and therefore
substantially hinders the growth of Internet radio businesses and platforms, as
well as hurts consumers, artists and entrepreneurs.

“This is a clear case of an out-dated legal framework that
stifles technology and consumer options,” said Lee Knife, Executive Director
& General Counsel of the Digital Media Association (DiMA). "This
bi-partisan solution will drive more innovation in the legal digital
distribution of music.”

The IRFA would also:

Provide all forms of digital radio the same standard at
rate-setting proceedings before the panel of judges on the Copyright Royalty
Board;

Promote
a competitive marketplace by making it easier for artists and labels to
negotiate directly with digital radio services and arrive at a negotiated rate
outside the CRB process.

"Legislation that establishes a fair royalty rate
setting-standard for Internet radio will drive investment in webcasting, which
ultimately offers greater opportunities and more revenue for working
artists," said Pandora Founder and Chief Strategy Officer, Tim Westergren.
"Internet radio has been shown to help decrease music piracy and increase
music sales. When the digital music sector is allowed to grow and innovate,
everybody wins."

Comments

Internet Radio Fairness Coalition Forms To Overhaul Net Radio Royalties

The Internet Radio Fairness Coalition, which has been assembled
by several Internet and broadcast radio services including Pandora, Clear
Channel and many others, officially launched last week. The Coalition comes
together with a mission of urging Congress to support legislation of the
Internet Radio Fairness Act of 2012 (IRFA), which they believe will bring the
royalty system for Internet radio into the 21st century.